Options Trading News

As Hewlett-Packard hovers just above eight-year lows, a large trader is anticipating a big move in either direction.

HPQ is down 0.55 percent at $17.13 this morning. The struggling PC maker closed Tuesday at $16.71 and touched $16.23 on Wednesday, its lowest levels since August 2004. Shares have fallen from the 52-week high of $30 set in February.

A trader bought 10,000 May 14 puts for the ask price of $0.83, according to optionMONSTER's Depth Charge system. Open interest was a mere 2 contracts at the start of the session, so this is a new position.

There were also some large stock blocks traded in HPQ this morning, including a block of 220,000 shares bought for $17.27 just two minutes after the puts traded. The total delta of the put position is -220,000, so that stock transaction would make the overall position directionally neutral.

This means that the trader is setting up a long volatility play that could profit if HPQ moves sharply higher or lower and/or if the volatility is more than that implied by the options. (See our Education section)

The other Greeks (Gamma, Vega, and Theta) are calculated by using month and strike data, and not by individual option. These are called strike-based Greeks. Gamma, Theta, and Vega are all strike-based Greeks

optionMONSTER® provides stock market insight, advanced options education, and actionable trade ideas to meet the needs of do-it-yourself investors. After spending decades in the trading pits of Chicago, Jon 'DRJ' and Pete Najarian founded the company in 2005 to help people better manage their own investment portfolios.